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Richa Mishra

New Delhi , Dec. 4

WITH the growing trend among companies to seek specialised consultancy services from multi-disciplinary firms, professionals such as company secretaries and chartered accountants have urged that the provision for incorporating partnership firms in the concept paper for simplified company law to be revisited.

"In the given global scenario to encourage formation of multi-disciplinary partnership firms, it is suggested that the number of partners, which a firm may have should be prescribed through the Rules," a Institute of Company Secretaries of India (ICSI) official told Business Line. This would make it easy for the Government to prescribe a larger number of persons who could join hands to form multi-disciplinary partnership firms, he pointed out.

The concept paper envisages that "No association of persons or a partnership shall be formed consisting of more than: 10 persons for the purpose of carrying on the business of banking; 50 persons for the purpose of carrying on a profession of such professions as may be prescribed... "

Instead of restricting the number, the new law may suggest that the partnership shall be formed consisting of 50 or more (as may be prescribed) persons, sources explained.

Besides, the concept paper also stipulates that, "Every member of an association or partnership carrying on business in contravention of this section shall be personally liable for all liabilities incurred in such business; and be punishable under this Act."

"We have also suggested that the Government could consider having a separate law for limited liability partnership (LLP) firms," ICSI sources said.

The LLP form should be initially made available only to those providing defined professional services such as lawyers, company secretaries, and accountants.

To be eligible for this form of partnership, the profession must be governed by a regulatory act that adequately controls and disciplines, errant professional conduct.

The Ministry may notify the professions eligible for such partnerships from time to time, sources added.

In fact, the co-ordination committee of the three professional Institutes of Chartered Accountants, Company Secretaries and Cost & Works Accountants has been discussing the issue of partnerships.

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